Merrill upgrade gives boost to Tullow Oil
Troubled explorer Tullow Oil has received an unexpected boost after analysts at Bank of America Merrill Lynch upgraded the stock.
The Irish-led firm has been battered by the plunge in oil prices and has also been hit by a number of failed exploration projects. Its shares have dropped more than 55pc in the past 12 months.
Despite its well-publicised issues, analysts at Merrill Lynch have improved their rating of the company from "underperform" (the equivalent of a "sell" rating) to "neutral" (the equivalent of "hold").
Merrill analysts see Tullow as a better risk than other drillers operating in a similar space, in particular Premier Oil.
The bank does note however that Tullow still has high levels of debt. Last year, the Aidan Heavey-led company secured a refinancing deal with its lenders. It has been one of the few oil firms to have been able to do that in the last two years.
Oil prices fell sharply again last week, with West Texas Intermediate (WTI) trading at just over $35 a barrel. Brent Crude - the main measure outside the United States - is priced at little more than $37 a barrel at present.
Merrill however believes prices have space to rebound.
"A steadier dollar and shrinking supply/demand imbalances should push Brent to an average $61 a barrel in 2017," they said.